Taxation

~~with focus on tax education~~

Sectoin 101 - Geographical Source of Income

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All incomes, which are chargeable to tax under Income Tax Ordinance, 2001 may broadly be classified into the following two categorize:
  1. Pakistan Source Income
  2. Foreign Source Income (that is not Pakistan Source income )
Status wise Taxable income:

Resident: Both Pakistan Source Income and Foreign Source income are Taxable
Non-Resident: Pakistan Source Income is Taxable only.

Head wise detail of Pakistan Source Income is as follows;

Salary:
  • Received from any employment exercised in Pakistan, wherever Paid.
  • Paid by or on behalf of the Fed. Govt., Provincial Govt. or local Govt. in Pakistan wherever the employment is exercised
Business Income - Resident:
  • Income is derived from any business carried on in Pakistan
Business Income - Non Resident:

Income is directecly or indirectly attributable to -
  • Permanent establishment (PE) of non resident person in Pakistan
  • Sales in Pakistan of goods marchandise of the same or similar kind as those sold by the person through PE in Pakistan
  • Other business activities carried on in Pakistan of the same or similar kind as those effected by the non resident through a PE in Pakistan
  • Any business conncection in Pakistan
  • Any remuneration derived by a person where the remuneration is paid by the resident person or borne by the PE in Pakistan of non-resident person on account of independent services including
  1. Professional services
  2. Services of entertainers
  3. Services of sportsman
  • Gain from disposal of any asset or property used in driving business income referred above.


Dividend Income:
  • When it is paid by resident company
Capital Gain:
  • Any Gain arising on disposal of shares in a resident company
Rental Income:
  • If it is derived from
  1. the lease of immovable property or
  2. any interest in or over immovable property including right to explore or exploit natural resouces
  • Any Gain arising from
  1. From alienation of any property or right mentioned above
  2. From alienation of any share in a company the assets of which consist wholly or principally, directly or indirectly, of property or right mentioned above.
Profit / Royalty / Technical Fee:
  • If it is paid by resident person except Where the profit / royalty / technical fee is payable in respect of any debt / right & property / services for the purpose of business carried on by resident outside Pakistan through a PE.
  • borne by PE in Pakistan of a non-resident person
Pension / Annuity:
  • If it is paid by resident or borne by PE in Pakistan of a non-resident person
Insurance / Reinsurance Premium:
  • If it is paid by insurance company to an overseas insurance / re insurance company
Any amount not covered above:
  • If it is paid by resident or borne by PE in Pakistan of a non-resident person

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posted @ 5:48 PM,

3 Comments:

At May 11, 2010 at 12:45 AM, Anonymous Muhammad Kamran said...

Very Good

 
At May 14, 2010 at 11:10 AM, Anonymous Anonymous said...

hope most of Tax students would get better idea to understand this section.

 
At May 15, 2010 at 10:04 AM, Anonymous Anonymous said...

Good work, not seen such efforts on Pakistani platform.

 

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